Japan-US Business Report Logo

No. 363, December 1999

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American Companies in Japan


FOOD AND AGRICULTURAL PRODUCTS

FRESH DEL MONTE PRODUCE, INC., one of the world's largest producers and distributors of fresh fruit, vegetables and other produce, is in the process of expanding its direct marketing capabilities in Japan by more than 50 percent. The Coral Cables, Florida- based company has signed lease agreements with the ports of Yokohama, Kobe, Osaka and Moji, near Kitakyushu, under which they will upgrade and expand their distribution centers as well as build state-of-the-art ripening facilities. Competitor DOLE FOOD CO. also has moved aggressively in recent years to build up infrastructure at various ports to facilitate direct deliveries to retailers.

About 220,000 pounds of premium pork center loins and other processed pork products will be shipped monthly by ELLISON MEAT CO. to restaurants and retailers through NICHIMEN CORP. The trader is the third distribution channel that the Pipestone, Minnesota company, which is owned by a group of family farmers, has established in Japan. It also exports through food processor NICHIREI CORP. and STARZEN CO., LTD., the country's top meat dealer. Big pork processor SWIFT AND CO. collaborates with Ellison on processing.

Cereal is a no-growth business in Japan. Therefore, KELLOGG CO. hopes to expand sales by promoting its line of snack foods. To do that, it has to find an alternative distribution route since AJINOMOTO CO., INC., which has marketed Kellogg's cereal products since 1962, does not handle snack foods. The solution is a tie-up with the subsidiary of WARNER-LAMBERT CO., which, in addition to being a major manufacturer of prescription drugs, makes and markets a variety of consumer goods, including chewing gum. Kellogg snack foods will be available through the Warner-Lambert distribution network in the spring of 2000.

WYETH (JAPAN) CORP. has agreed to sell its infant-formula business to a management buyout fund. The company, a wholly owned unit of AMERICAN HOME PRODUCTS CORP., currently ranks fourth in Japan's infant-formula market with about 7 percent of sales. However, this, too, is a business with virtually no expansion prospects. The sale price was not disclosed.

Effective January 1, 2000, the 1 million or so vending machines that COCA-COLA CO.'s huge Japan subsidiary operates will be managed by a single company. The soft drink giant's COCA-COLA NATIONAL VENDING CO. manages most of this equipment now, but about 64,000 vending machines that Coca-Cola acquired at the end of 1998 from FV CORP. still are operated by that firm. It will be merged into Coca-Cola National Vending, which will have approximately 1,100 employees.

Beer, especially foreign brands, is not selling well in Japan. That reality is forcing ANHEUSER-BUSCH COS, INC. to overhaul its marketing strategy. It will dissolve money-losing BUDWEISER JAPAN CO., LTD., which the world's largest brewer formed in 1993 with KIRIN BREWERY CO., LTD. (10 percent) to make Budweiser in bottles and cans at Kirin's Tochigi prefecture plant and to market these products as well as some Bud in cans imported from the United States. Starting in January 2000, Kirin will produce and distribute Budweiser beer under an exclusive license from Anheuser-Busch. To encourage the Japanese brewer to promote the product, the St. Louis beer giant will split profits equally rather than take the typical bigger cut. Sales of Bud dropped in 1998 to 7 million cases, each containing 24 12-ounce bottles or cans, from 10 million cases in 1997.

An exchange rate of ¥105=$1.00 was used in this report.aaaaaa

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